There have been many thoughts and opinions published on what 2009 will be like, most are less than positive for most sectors of the economy. I naturally get asked about housing and mortgages.
In the resale market along Lake Huron the last two months of 2008 definitely slowed and while that normally happens there was a noticeable lack of activity this past year.
What then for 2009.
If you listen to or read our friends in the media you might be inclined to dig a hole and hide in it especially if it is US media and to a large extent Canadian media using negative headlines on US stories.
New house starts are definitely down, but down from record numbers since the start of 2000. Re-Sales are also down but again down from record numbers in this century.
Listings are up creating an adjustment to the marketplace resulting in a more balanced marketplace and turning from a Sellers market to a moderate Buyers market.
In our area along Lake Huron a large number of properties were bought in the last few years by Americans taking advantage of the huge difference in Buying power the Us dollar had, as much as 40% at one time. This surge drove Lakefront prices to more than double. This past year we've seen many of these properties come up for re-sale as many Americans facing uncertainty back home cash out. This has virtually eliminated further large increases in Lakefront values and in many cases lowered previous asking prices. The upsurge in Lakefront prices dragged other resort properties up and the drop in Lakefront prices is now moderating those prices as well. How much.... 5 to 10%. Will they continue to fall....... Not likely as there is still a demand for Vacation and Retirement properties and as long as there is water in Lake Huron there will be demand. Insofar as Lakefronts many may be waiting for further drops but remember they're not making any more of it so there is only a limited supply and prices will continue to reflect that.
Mortgages are at a 50 year low and there is money to lend. The factors that created the US mortgage crisis largely do not exist in Canada. Underwriting standards have been and are tougher and Canadians generally do not borrow or leverage their homes as much as Americans. The average Canadian homeowner has a 69% equity stake in their home The US homeowner 45%. So called "teaser" mortgages ie lower initial interest rates that reverted to much higher rates later, were not offered here. The percentage of Canadian mortgages in default is .3 % while its 4.5 % and rising in the US.
In short it is now a very good time to Buy. Inventories of resales are high offering a better selection than in the past, prices have moderated, and mortgage rates are unbelievably low and most of all don't forget properties on or with access to the Lake are limited in supply and they are not making any more.